Are your money habits holding you back financially?

You might believe you’re on the way to wealth if you avoid negative behaviors like over-drafting or hitting your credit limits. However, there are a few impediments to riches that go unnoticed by most of us because of how common they are. Many of us forget how easy it is to be thrown into a spiral of debt as a result of one emergency.

Here are four major—yet surmountable—habits blocking us from riches, and ways to get back on track in the event that they apply to you.

1. You’d Be Impaired by a $2,000 Emergency

Consider ordinary things that could happen, such as the motor in your car dying or the heater in your home going out. On the off chance that you don’t have the money to pay for an ordinary crisis, you are monetarily delicate. If you haven’t been hit with an expensive emergency in a while, it can be easy to overlook the fact that you’re monetarily delicate.

Plenty of people have no debt and good jobs, but don’t have the money in the bank to manage an emergency should one arise. In the event that they lose their employment or are injured and can’t work, then what? The intelligent thing to do is to realize that an emergency can happen at any time, and be prepared financially to handle it.

2. You’re Not Paying More than the Minimum Payment

While it might seem like a good idea to only make the minimum credit card payments when you’re tight financially, doing this will hurt you in the long run. It might feel like you’re saving money at the moment, but the balance left on your credit card will only increase from interest rates and you could be paying the card off for years. In addition, your credit report will show a high utilization of the card, which can hurt your credit score.

The best thing to do is to pay off as much as you can. Interest rates vary but you’d be saving around 10% to 30% in interest fees yearly when you pay the balance off on your credit cards. Another option is to take out a personal loan, these loans often have lower interest rates than credit cards and if you have multiple credit cards you’re paying off, you can use the loan to pay the balance and only have one payment to deal with.

3. You Aren’t Tracking Your Spending Carefully

Continually making purchases with a debit card won’t stray you into the red like using a credit card could—yet in the event that you’re not watching your purchases, you could very easily end up in financial stress. Thoughtless spending is too easy; it’s best to avoid this by tracking your day-to-day purchases. Keeping close track allows you to see where you’re spending too much and where you can afford to cut costs and instead, put the money in savings.

4. You Lack a Plan

It’s easy to float along and not take ownership of your debt. Many people know they owe money but don’t really distinguish between owing money and genuinely knowing how much you own, the costs and fees, and what they need to do to get rid of the debt.

A good way to come up with a plan to become debt-free is to use tools like online credit card calculators and debt calculators to figure out your true balances, interest fees, etc. These will help you see the full picture and from there you can come up with a plan to tackle the debt holding you back.

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